GRADE 11 NOVEMBER 2012 ACCOUNTING - …

1 Province of the EASTERN CAPE EDUCATION NATIONAL SENIOR CERTIFICATE GRADE 11 NOVEMBER 2012 ACCOUNTING MARKS: 300 TIME: 3 hours This question paper consists of 16 pages. 2 ACCOUNTING ( NOVEMBER 2012 ) INSTRUCTIONS AND INFORMATION 1. This question paper comprises SIX compulsory questions. 2. Answer ALL the questions in the special answer book provided. 3. Where applicable, workings must be shown in order to achieve part-marks. 4. Non-programmable calculators may be used. 5. You may use a dark pencil or a black/blue pen in order to answer the questions.

2 6. A breakdown of the questions is provided. You must attempt to comply with the suggested time allocation for each question. ( NOVEMBER 2012 ) ACCOUNTING 3 Use the information given in the table below as a guide when answering the questions. To exercise good time management, try NOT to deviate from it. QUESTION 1: (105 marks ; 63 minutes) Topic of the question Learning Outcomes covered Partnerships LO1 AS5 Financial statements of partnerships Ratios and interpretation of financial information LO3 AS6 Ethical issues QUESTION 2: (45 marks ; 27 minutes) Topic of the question Learning Outcomes covered Manufacturing Concerns LO2 AS2 Posting to specific ledger accounts Break-even analysis QUESTION 3: (45 marks.)

3 27 minutes) Topic of the question Learning Outcomes covered Cash Budgets LO2 AS3 Prepare and present cash budgets LO3 AS6 Internal control over cash QUESTION 4: (30 marks ; 18 minutes) Topic of the question Learning Outcomes covered Bank Reconciliation LO1 AS4 Preparing bank reconciliation statements LO3 AS6 Internal control over cash QUESTION 5: (35 marks ; 21 minutes) Topic of the question Learning Outcomes covered Clubs and Stock systems LO1 AS2 Clubs: ledger accounts and interpretation LO3 AS4 AS6 Stock recording systems Internal control over stock QUESTION 6: (40 marks ; 24 minutes) Topic of the question Learning Outcomes covered Asset Management LO3 AS3 Asset acquisition, asset disposal and depreciation 4 ACCOUNTING ( NOVEMBER 2012 ) QUESTION 1 PARTNERSHIPS (105 marks.

4 63 minutes) The information presented below is from the records of JJ Stores for the financial year ended 29 February 2012 . JJ Stores is a partnership with partners Jakob and Julies. The business deals in footwear sales and offers a repair facility. The business maintains a constant profit mark-up of 60% on cost. INSTRUCTIONS: MATCHING ITEMS Choose a statement from COLUMN B that matches the GAAP principle listed in COLUMN A. Write only the letter next to the question number in the space provided in the answer book.

5 COLUMN A COLUMN B Matching A The market value of the building is R800 000, but it must be recorded at its original cost of R340 000 Going-concern B small expenses of the business are grouped together and disclosed as Sundry Expenses Historical cost C Money lost due to theft of stock is written off, even though it may be recovered in the future Prudence D Insurance includes R340 which relates to the next financial year Materiality E Financial statements are prepared on the assumption that the business will continue operating in the future (10) Taking into account the adjustments, complete the Income Statement for the year ended 29 February 2012 .

6 (40) Prepare the following notes to the Balance Sheet: Trade and Other Receivables (8) Partners Current Account Note (21) Comment on the LIQUIDITY position of this business. Quote TWO relevant ratios to support your comment. (8) Calculate the total earnings of partner Jakob. (Show workings). (4) Calculate the return on investment of partner Julies. Should he be satisfied with this return? Elaborate. (8) Julies is concerned about the total drawings of Jakob. Explain why you think it bothers him, and provide TWO suggestions on how he can address this concern.

7 (6) ( NOVEMBER 2012 ) ACCOUNTING 5 INFORMATION a. Extracted from the Pre-Adjustment Trial Balance on 29 February 2012 DEBITS CREDITS Capital: Jakob 330 000 Capital: Julies 220 000 Current Account: Jakob (1 March 2011) 9 850 Current Account: Julies (1 March 2011) 12 750 Drawings: Jakob 83 610 Drawings: Julies 24 140 Equipment 77 540 Accumulated Depreciation on equipment 32 820 Trading Inventory 88 770 Debtors Control 27 777 Provision for Bad Debts 1 420 Creditors Control 64 600 Loan.

8 AB Bank 84 375 Fixed Deposit (14% ) 50 000 Cash and Cash Equivalents 4 695 Sales 540 270 Cost of Sales 204 180 Debtors Allowances 18 020 Rent Income 46 520 Fee Income (on footwear repairs) 17 630 Consumable Stores 15 430 Salaries and Wages 42 600 Insurance 8 725 Stationery 9 288 Water and Electricity 12 545 Bad Debts 2 323 Interest on investment 5 250 Discount received 2 180 Sundry Expenses ? 6 ACCOUNTING ( NOVEMBER 2012 ) ADDITIONAL INFORMATION: a) A physical stock taking on 29 February 2012 revealed the following inventories on hand: Trading Inventory R87 650 Consumable Stores R1 430 b) Make provision for interest on investment.

9 This investment has been in existence for the entire year. c) A debtor who owed R1 580 was declared insolvent. His estate paid 35% of his debt, and this has been correctly recorded. The remaining balance must be written off as a bad debt. d) The provision for bad debts must be adjusted to 4% of debtors. e) The rent increased by R320 on 1 December 2011. The tenant has paid the rent until the end of March 2012 . f) Insurance includes R675 which relates to the period 1 January 2012 to 31 March 2012 . g) The total interest on loan was transferred to the Loan Account (capitalised) on 27 February 2012 .

10 Interest is charged at 12,5% h) Depreciation on equipment of R15 472 must be taken into account. i) The partnership agreement made provision for the following: 1. Partners salary allowance: Jakob and Julies are entitled to an annual salary allowance of R90 000 and R86 600 respectively. 2. Interest on capital is calculated at 8% on capital balances. Take into account that Julies increased his capital by R30 000 on 1 June 2011. 3. Partners share profits and losses in proportion to their capital balances at the end of the financial year.